Exhibit 99.1
FOR IMMEDIATE RELEASE
FORRESTER RESEARCH ANNOUNCES FIRST-QUARTER 2003 FINANCIAL RESULTS
CAMBRIDGE, Mass., April 30, 2003... Forrester Research, Inc. (Nasdaq: FORR)
today announced financial results for the first quarter ended March 31, 2003, in
line with its previous financial guidance.
FIRST-QUARTER FINANCIAL PERFORMANCE
- - Total revenues were $24.8 million, compared with $26.1 million for the
first quarter of last year.
- - On a GAAP-reported basis, which reflects an effective tax rate of 31
percent, Forrester reported first-quarter net income of $1.8 million, or
$0.08 per diluted share compared to a net loss of $6.1 million, or $0.26
per diluted share for the same period last year.
- - On a pro forma basis, which excludes amortization of acquisition-related
intangible assets of $924,000 and a write-down of $300,000 related to
impairments of certain non-marketable securities, and which reflects a pro
forma effective tax rate of 35 percent, pro forma net income was $2.5
million, or $0.11 per diluted share, for the first quarter of 2003. The
pro forma effective tax rate of 35 percent varies from our actual
effective tax rate of 31 percent due to our tax-free interest income
decreasing as a percentage of our pro forma pre-tax income. This compares
with pro forma net income of $3.3 million, or $0.14 per diluted share for
the same period last year, which excludes the reorganization costs
of $9.1 million, amortization of acquisition-related intangible assets of
$82,000, and impairment charges of $2.2 million.
A reconciliation of GAAP results to pro forma results may be found in the
attached financial tables.
GIGA INTEGRATION
"Although Forrester's first quarter was extremely busy with the acquisition and
integration of Giga Information Group, we remained focused on our clients and
were pleased to meet our financial guidance," said George F. Colony, chairman of
the board and chief executive officer. "Client satisfaction remains the top
priority throughout this integration and clients will continue to be served by
the same research and account teams in 2003. We are selling two distinct but
complementary research brands -- Forrester and Giga. Behind the scenes,
integration is ahead of schedule, and we are already achieving economies of
scale in our general and administrative functions."
Additionally, Forrester integrated Giga's ForSITE(TM) offering into the
Forrester Oval Program(TM)'s CIO Group during the first quarter. The combined
board, which consists of 80 members, provides CIOs with a peer network,
client-directed research, benchmark data, best practices, and short projects.
Along with the CIO Group, three other technology councils from Giga now
constitute the Forrester Oval Program: Applications and Development, Security,
and Enterprise Architecture.
"We strongly believe the new Forrester value proposition is differentiated in
the marketplace," said Colony. "Forrester helps companies plan while Giga helps
them act. Aligning these two powerful offerings will create amazing value for
our clients."
CUSTOM CONSUMER RESEARCH
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Forrester First-Quarter Fiscal 2003 Results / Page 2
In addition to the enhanced services from the Giga acquisition, Forrester also
launched a new research offering called Custom Consumer Research (CCR) in the
first quarter. CCR helps consumer businesses develop, market, and measure the
success of their products. CCR leverages Consumer Technographics(R), the most
comprehensive quantitative research program available for determining how
technology is considered, bought, and used by consumers.
FINANCIAL GUIDANCE
Forrester's guidance for the second quarter of and full year 2003 is as follows:
Second-Quarter 2003 (GAAP):
- - Total revenues of approximately $33.0 million to $35.0 million.
- - Operating margin of approximately (5) percent to 1 percent.
- - Interest income of approximately $800,000 to $900,000.
- - An effective tax rate of 31 percent.
- - Diluted earnings per share of approximately ($0.03) to $0.02.
Second-Quarter 2003 (Pro Forma):
Pro forma financial guidance excludes amortization of acquisition-related
intangible assets of approximately $2.6 million, impairment charges related to
non-marketable securities, and second-quarter 2003 integration-related expenses
estimated at $1.0 million to $2.0 million.
- - Pro forma operating margin of approximately 8 percent to 10 percent.
- - Pro forma effective tax rate of 35 percent, which varies from our actual
effective tax rate of 31 percent due to our tax-free interest income
decreasing as a percentage of our pro forma pre-tax income.
- - Pro forma diluted earnings per share of approximately $0.10 to $0.12.
Full-Year 2003 (GAAP):
- - Total revenues of approximately $125.0 million to $130.0 million.
- - Operating margin of approximately 1 percent to 6 percent.
- - Interest income of approximately $3.8 million to $4.2 million.
- - An effective tax rate of 31 percent.
- - Diluted earnings per share of approximately $0.20 to $0.28.
Full-Year 2003 (Pro Forma):
Pro forma financial guidance excludes amortization of acquisition-related
intangible assets of approximately $8.7 million, impairment charges related to
non-marketable securities, and integration-related expenses estimated at $1.0
million to $2.0 million.
- - Pro forma operating margin of approximately 10 percent to 12 percent.
- - Pro forma effective tax rate of 35 percent, which varies from our actual
effective tax rate of 31 percent due to our tax-free interest income
decreasing as a percentage of our pro forma pre-tax income.
- - Pro forma diluted earnings per share of approximately $0.47 to $0.53.
Forrester Research enables companies to understand the impact of technology on
business. Forrester's WholeView(TM) Research, Strategic Services, and Events
help clients understand how technology change affects their customers, strategy,
and technology investment. In February 2003, Giga Information Group, Inc. became
a
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Forrester First-Quarter Fiscal 2003 Results / Page 3
wholly owned subsidiary of Forrester Research, Inc. Giga, through its Giga
Advisory(R), Giga Consulting(TM), and Events, provides objective research,
pragmatic advice, and personalized consulting to global IT professionals.
Established in 1983, Forrester is headquartered in Cambridge, Mass. For
additional information, visit www.forrester.com.
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements include, but
are not limited to, Forrester's financial and operating targets for the second
quarter of and full-year 2003, statements about the potential success of
WholeView and other product offerings, and the ability of Forrester to achieve
success as the economy improves. These statements are based on Forrester's
current plans and expectations and involve risks and uncertainties that could
cause actual future activities and results of operations to be materially
different from those set forth in the forward-looking statements. Important
factors that could cause actual future activities and results to differ include,
among others, Forrester's ability to successfully integrate Giga into
Forrester's operations, Forrester's ability to anticipate business and economic
conditions, market trends, competition, the ability to attract and retain
professional staff, possible variations in Forrester's quarterly operating
results, risks associated with Forrester's ability to offer new products and
services, and Forrester's dependence on renewals of its membership-based
research services and on key personnel. Forrester Research undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events, or otherwise. For further information,
please refer to Forrester's reports and filings with the Securities and Exchange
Commission.
The consolidated statements of income, consolidated balance sheets, and
consolidated statements of cash flows are attached.
Kimberly Maxwell
Director, Investor Relations
Forrester Research, Inc.
+1 617/613-6234
(C) 2003, Forrester Research, Inc. All rights reserved. Forrester, WholeView,
Technographics, and Forrester Oval Program are trademarks of Forrester Research,
Inc. Giga Advisory, Giga Consulting, and ForSITE are trademarks of Giga
Information Group, Inc.
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FORRESTER RESEARCH, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended March 31,
2003 2002
---- ----
(Unaudited)
REVENUES
Research services $ 18,821 $ 19,810
Advisory services and other 5,976 6,246
-------- --------
TOTAL REVENUES 24,797 26,056
OPERATING EXPENSES
Cost of services and fulfillment 9,525 8,981
Selling and marketing 8,067 8,472
General and administrative 3,308 3,326
Depreciation 1,693 2,066
Amortization of intangible assets 924 82
Reorganization costs -- 9,088
-------- --------
TOTAL OPERATING EXPENSES 23,517 32,015
INCOME (LOSS) FROM OPERATIONS 1,280 (5,959)
Other income, net 1,595 1,560
Impairments of non-marketable investments (300) (2,248)
-------- --------
INCOME (LOSS) BEFORE INCOME TAXES 2,575 (6,647)
Income tax provision (benefit) 798 (532)
-------- --------
NET INCOME (LOSS) $ 1,777 $ (6,115)
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Diluted earnings per share $ 0.08 $ (0.26)
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Diluted weighted average shares outstanding 22,920 23,146
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Basic earnings per share $ 0.08 $ (0.26)
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Basic weighted average shares outstanding 22,739 23,146
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PRO FORMA DATA (1):
Income (loss) from operations $ 1,280 $ (5,959)
Amortization of intangible assets 924 82
Reorganization costs -- 9,088
-------- --------
PRO FORMA INCOME FROM OPERATIONS 2,204 3,211
Other income, net 1,595 1,560
-------- --------
Pro forma income before income taxes 3,799 4,771
Pro forma income tax provision 1,330 1,431
-------- --------
PRO FORMA NET INCOME $ 2,469 $ 3,340
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Pro forma diluted earnings per share $ 0.11 $ 0.14
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Diluted weighted average shares outstanding 22,920 23,146
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(1) The pro forma data excludes amortization of acquisition-related intangible
assets, reorganization costs, and impairments of non-marketable
investments, as well as their related tax effects. This does not purport
to be prepared in accordance with Generally Accepted Accounting
Principles.
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FORRESTER RESEARCH, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2003 2002
---- ----
ASSETS
Cash and cash equivalents $ 23,916 $ 11,479
Marketable securities 116,708 183,152
Accounts receivable, net 22,624 17,791
Deferred commissions 4,732 3,524
Prepaid expenses and other current assets 8,144 5,902
--------- ---------
Total current assets 176,124 221,848
Property and equipment, net 12,002 10,674
Goodwill, net 69,251 13,244
Intangibles assets, net 19,320 760
Deferred income taxes 20,902 21,630
Non-marketable investments and other assets 12,313 10,117
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TOTAL ASSETS $ 309,912 $ 278,273
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 2,299 $ 1,601
Capital lease obligations 208 --
Accrued expenses 29,384 20,681
Deferred revenue 67,392 42,123
--------- ---------
Total liabilities 99,283 64,405
Preferred stock -- --
Common stock 241 240
Additional paid-in capital 168,538 167,935
Retained earnings 66,531 64,754
Treasury stock, at cost (25,330) (20,085)
Accumulated other comprehensive income 649 1,024
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Total stockholders' equity 210,629 213,868
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 309,912 $ 278,273
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FORRESTER RESEARCH, INC.
CONSOLIDATED STATEMENTS CASH FLOWS
(In thousands)
Three months ended March 31,
2003 2002
---- ----
CASH FLOWS FROM OPERATIONS:
Net income (loss) $ 1,777 $ (6,115)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities -
Depreciation 1,693 2,066
Amortization of intangible assets 924 82
Write-downs of non-marketable investments 300 2,248
Loss on disposal of property and equipment -- 92
Tax benefit from stock options 81 --
Deferred income taxes 728 (532)
Non-cash reorganization costs -- 2,772
Realized gain on sale of marketable securities (509) --
Amortization of premiums on marketable securities 207 158
Changes in assets and liabilities, net of acquisition -
Accounts receivable 5,803 9,579
Deferred commissions 192 621
Prepaid expenses and other (169) (740)
Accounts payable (807) (611)
Accrued expenses (5,657) (1,291)
Deferred revenue (925) (6,519)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,638 1,810
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Giga Information Group, Inc., net of cash
acquired (51,549) --
Purchases of property and equipment (69) (244)
Purchase of non-marketable investments (1,250) (1,675)
Decrease in other assets 123 139
Purchase of marketable securities (77,884) (21,782)
Proceeds from sales and maturities of marketable securities 144,196 18,202
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 13,567 (5,360)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercises of employee stock options 523 2,421
Acquisition of treasury shares (3,245) (3,547)
Structured stock repurchase (2,000) --
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (4,722) (1,126)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (46) 23
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,437 (4,653)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 11,479 17,747
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 23,916 $ 13,094
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